YIP SUEN PUN v. WONG KA KEE t/a C&K ENGINEERING CO AND OTHERS

HCPI 848/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES ACTION NO. 848 OF 2003

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R E A S O N S  F O R  D E C I S I O N

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1.  At the conclusion of the hearing of this summons, I dismissed the 1^st, 2^nd and 4^th to 7^th Defendants’ summons dated 29 September 2006 with costs to the Plaintiff and indicated that I would hand down the reasons for my decision on a later date, which I now do.

Background

2.  On the opening day of the trial of this action, on 27 June 2006, the Plaintiff and the 1^st, 2^nd and 4^th to 7^th Defendants reached terms to settle the action.  The settlement was on the terms of a draft consent order signed by counsel.

3.  By the consent order (“the Consent Order”), it was ordered that:-

(1) Judgment be entered against the 1^st, 2^nd and 4^th to 7^th Defendants jointly and severally in the sum of HK$10,750,000 inclusive of interest which is on top of the employees’ compensation already received by the Plaintiff in the sum of HK$1,332,200;

(2) Costs of the action against the 1^st, 2^nd and 4^th to 7^th Defendants be to the Plaintiff, to be taxed if not agreed; and

(3) There be a stay of execution of the said judgment for two months from the date of the Consent Order.

4.  The Consent Order was made on 27 June 2006 but was not sealed until 10 July 2006.

5.  It was common ground between the parties that the date from which the two month stay of execution began to run is 27 June 2006, so that the Plaintiff became entitled to levy execution on the judgment as from 28 August 2006.

6.  The 1^st, 2^nd and 4^th to 7^th Defendants paid the judgment sum of HK$10,750,000 by way of three cashier’s orders on 18 September 2006.  They have also paid the sum of HK$25,731.70 by way of interest at the judgment rate for the period from 10 September 2006 and the further sum of HK$45,030.40 by way of interest at the judgment rate for the period from 27 August 2006 to 10 September 2006.  As a result of the disagreement referred to below, the 1^st, 2^nd and 4^th to 7^th Defendants have not paid interest at the judgment rate for the two month period from 27June 2006 to 27 August 2006.  The amount of such interest not paid has been calculated by the parties as being the sum of HK$237,770.53.

The issue on this summons

7.  The parties disagreed as to whether, under the judgment, interest at the relevant judgment rate is payable on the judgment sum of HK$10,750,000 as from 27 June 2006 or only as from 28 August 2006.

8.  Hence, by this summons dated 29 September 2006, the 1^st, 2^nd and 4^th to 7^th Defendants sought an order that interest on the judgment sum does not commence to run until after the expiry of two months from the date of the Consent Order.

The 1^st, 2^nd and 4^th to 7^th Defendants’ submissions

9.  The 1^st, 2^nd and 4^th to 7^th Defendants advanced a number of submissions to support their position that interest at the judgment rate should not run in the two month period from 27 June 2006 to 27 August 2006.

(1) First, it was argued that the Consent Order had the effect of crystallising the amount of principal and interest payable under the judgment, so that no interest at judgment rate should accrue on the HK$10,750,000 sum until the time when execution could be levied, i.e. until 28 August 2006.

(2) Second, it was argued that the Consent Order was not a judgment debt within s. 49(1) of the High Court Ordinance, Cap.4, until the expiry of the period of the stay of execution when execution could then be levied.

(3) Third, it was argued (as a subsidiary point to the second point and as further support for the contention that there was no judgment debt until the expiry of the stay of execution) that, the purpose of interest being to compensate a plaintiff for being deprived of money to which he is due, the Plaintiff was not deprived of any such entitlement during the two month period in question because of the parties’ agreement to stay execution of the judgment for that period.

The Defendants’ first point

10.  The first point turns on the construction of the Consent Order.  In order for the 1^st, 2^nd and 4^th to 7^th Defendants to succeed it would be necessary to demonstrate that, on its true construction, the Consent Order crystallised the amount of principal and interest upon which execution could be levied after the period of stay had elapsed.  I do not think the Consent Order can properly be construed as having that effect. 

11.  It is true that the Consent Order does refer to the entering of judgment in “the sum of HK$10,750,000 inclusive of interest” but that reference to interest is, in my opinion, clearly a reference to the amount of pre-judgment interest.  This being an action for personal injuries, it is clear that the calculation of pre-judgment interest would involve a number of discrete calculations and, on the facts of this case, such pre-judgment interest would be a substantial element of the amount to be recovered by the Plaintiff.  Hence, the words “inclusive of interest” in paragraph 1 of the Consent Order were clearly intended to clarify that the HK$10,750,000 sum included such pre-judgment interest.

12.  Interest at judgment rate applies to all judgment debts as a matter of statute (see s. 49(1) of the High Court Ordinance) and so it is not strictly necessary to include a reference to post-judgment interest at such rate in a judgment.  The parties could have but did not expressly provide that interest at the judgment rate should not accrue on the sum of HK$1,750,000 during the period of the stay of execution.

13.  Nor do I see any reason why such a provision should be implied into the Consent Order.  There is no obvious basis for such an implication.  The parties were settling the action on terms that the Plaintiff would recover HK$10,750,000 inclusive of pre-judgment interest.  The settlement was made by way of a consent order which took effect on the date it was made, as is common ground between the parties.  The fact that the parties agreed that the Plaintiff would have no right to levy execution on the assets of the 1^st, 2^nd and 4^th to 7^th Defendants until the expiry of two months from the date of the Consent Order does not mean that the Plaintiff was not entitled to the judgment sum as from that date.  Nor did it mean that the 1^st, 2^nd and 4^th to 7^th Defendants could not have satisfied the judgment by making payment before the expiry of two months from the date of the Consent Order.

14.  For these reasons, in my view, the language of the Consent Order does not point inevitably to the parties having intended to suspend the accrual of interest at the judgment rate by the use of the phrase “inclusive of interest” in the first paragraph of the Consent Order.  There can therefore be no question of the Consent Order having crystallised the amount of principal and interest on which execution could be levied after the stay.

15.  It may well be that the parties did not actually turn their minds to the question of post-judgment interest when they entered into the agreement to settle the action.  Some of the inter partes correspondence prior to the issue of this summons certainly suggests that this may have been the case.  If so, it is a matter of speculation as to whether they might have included a term which expressly suspended the accrual of interest at judgment rate from the date of the Consent Order until after the expiry of the period of stay.  The fact remains that there is no such express term and I do not think such a term can be implied.

16.  I would add that I do not think the case of Miruvor Limited v. National Insurance Co. Ltd., CACV 3937/2001, unrep., 12 June 2003, relied on by Mr Wong, counsel for the 1^st, 2^nd and 4^th to 7^th Defendants, assisted the Defendants.  Indeed, the case is support for the proposition that clear language is required in order for it to be said that a plaintiff has waived its entitlement to interest at the judgment rate.  In my judgment, no such clear language has been used in the Consent Order in the present case. 

The Defendants’ second point

17.  As to the second point advanced by the 1^st, 2^nd and 4^th to 7^th Defendants, I do not think Mr Wong is right in his submission that the judgment sum of HK$10,750,000 under the Consent Order was not a judgment debt until after the expiry of the stay of execution.

18.  As I have already noted, it was common ground between the parties that the Consent Order took effect on the date it was made, namely 27 June 2006, and not on the later date when it was sealed.  The Consent Order simply provided that judgment be entered in the settlement sum.  It was not a conditional order, nor was it contingent upon some other event.  In my view, the judgment sum was a judgment debt as from the date of the Consent Order.  The mere fact that the Plaintiff was restricted in its ability to enforce the judgment by levying execution against the assets of the 1^st, 2^nd and 4^th to 7^th Defendants until the expiry of two months thereafter does not affect this.

19.  Mr Wong submitted that, because the judgment sum could not be subject to execution, it did not fall within the term “judgment debt” in s. 49(1) of the High Court Ordinance.  He relied on two cases in support of this proposition, neither of which, in my judgment, assists.  The first case is Jones v. Thomson (1858) El. Bl. & El. 63, which concerned the question of whether a judgment for unliquidated damages was a debt within the meaning of s. 61 of the Common Law Procedure Act 1854 for the purpose of garnishee proceedings.  The second case is Duke of Beaufort v. Phillips (1847) 1 De G. & Sm. 321, which concerned the question of whether a decree of specific performance against a defendant which had not yet been executed was sufficient to constitute a judgment debt so that the plaintiff should rank as a creditor of the defendant’s estate (the defendant having died since the decree of specific performance).  The questions in those two cases were very different to the issue in this application.  But, in any event, they do not, in my view, support the proposition for which Mr Wong cited them, namely that to constitute a judgment debt within s. 49(1) of the High Court Ordinance there must be a judgment which is capable of being executed so that the Plaintiff can obtain satisfaction.

20.  Mr Wong further submitted that the stay of execution meant that the Plaintiff could not summon the 1^st, 2^nd and 4^th to 7^th Defendants to attend as a judgment debtor under Order 48 of the Rules of the High Court.  He contended that a judgment debt only comes into effect where such a power exists and relied on Jeffris v. Tomlinson (1887) 3 TLR 193 in support of this contention.  That case, however, concerned the question of whether a garnishee who disputed his liability to the judgment debtor should be liable to be ordered to attend for examination and does not support the broad contention made by Mr Wong, which, in my view, is not correct.  The mere fact that execution of a judgment is suspended by reason of a stay of execution does not mean that there cannot be a judgment debt arising under that judgment.

The Defendants’ third point

21.  Finally, as to the third point advanced by the 1^st, 2^nd and 4^th to 7^th Defendants, it is correct that the purpose of an award of interest is to compensate a plaintiff for being deprived of his money rather than to penalise a defendant.  However, I disagree with the Defendants’ submission that the effect of the stay of execution was that the Plaintiff was not to be entitled to his judgment sum until after that period of stay had expired.

(1) The Consent Order took effect immediately and judgment was entered for the Plaintiff in the sum of HK$10,750,000.  By reason of the agreement to stay execution, the Plaintiff consented to forego the right to levy execution immediately against the assets of the 1^st, 2^nd and 4^th to 7^th Defendants but this did not affect the fact that the Plaintiff was entitled to the judgment sum as from the date of judgment. 

(2)  Had the 1^st, 2^nd and 4^th to 7^th Defendants chosen to do so, they could have satisfied the judgment by paying the sum of HK$10,750,000 to the Plaintiff on the date of the Consent Order or by paying that sum and accrued post-judgment interest at the applicable judgment rate of interest at any time thereafter and even before the expiry of the period of stay of execution.  It was entirely a matter for the 1^st, 2^nd and 4^th to 7^th Defendants if they chose to wait until after the period of the stay of execution to satisfy the judgment debt by making payment. 

(3)  By reason of the stay of execution, they had the comfort of knowing that their assets would be free from being subject to execution during the period of the stay.  Instead of having to pay the judgment sum immediately, they could invest the sum themselves in such a way as to cover their liability to pay the judgment together with such interest as had accrued at the judgment rate at the time when they chose, or were forced by the prospect of execution being levied against them, to satisfy the judgment.

Conclusion

22.  It follows that, in my opinion, interest at the relevant judgment rate is payable on the judgment sum of HK$10,750,000 as from 27 June 2006.

23.  For all the above reasons, I dismissed the 1^st, 2^nd and 4^th to 7^th Defendants’ summons dated 29 September 2006 and awarded costs to the Plaintiff.